Israeli consumers should soon enjoy lower prices for meat and a much bigger selection, ranging from premium grade Angus beef to cheaper Polish cuts, following a deal reached by the government and cattle growers to overhaul the industry.
The agreement will sharply raise the duty-free quotas on imported beef and other meat, and reduce tariffs of imports that exceed the quotas. The agreement will also break the duopoly on meat imports now controlled by Tnuva, Israel’s biggest food maker, and its rival Dabbah.
In return, cattle and sheep growers are to get some 250 million shekels ($66.5 million) in direct aid from the government over the eight years the new regime is in effect,
“The two companies not only control supply, but also the production chain, slaughtering and vacuum packing for retailers,” said a government source who asked not to be identified. “Opening up imports will cause the market to no longer be controlled by two players who set the prices, the level of supply and are able to threaten cattlemen who won’t sell at the price they want – there was no one else to slaughter their cattle.”
The government estimates that Israelis consume some 20,000 tons of meat every year, not counting institutional sales to places like hotels. Dabbah is estimated to control 54% of the market and Tnuva about 23%.
The newly structured market should allow more importers to enter the market, creating more competition that brings down prices. Consumers will also enjoy a wider selection of meats, including premium cuts from Argentina and Angus beef as well a Polish imports for the lower-priced segments of the market. Imports from Italy, Portugal and Spain are expected to follow. Agriculture Ministry officials hope that the growing import competition and wider selection will percolate down to the retail sector and increase competition there, too, bringing more savings to the consumer.
There will also be a humanitarian benefit to the new import regime because it relies more on imports of vacuum-packed pieces rather than live calves, a practice that has been characterized by cruel and abusive treatment. The duty-free quota on live imported calves will expire in 2024, which will make the practice uneconomical, officials say.
The agreement calls for duty-free imports to reach 7,500 tons this year and grow by 5,000 annually in 2017 and 2018 to a total of 17,500, accounting for nearly all the 20,000 tons imported every year right now.
Meat imports that exceed the duty-free ceiling will enjoy lower tariffs. Today the rate is 12% plus 13 shekels a kilogram. The shekel portion will fall to 8.66 shekels this year, to 4.33 in 2018 and disappear in 2019. The 12% portion of the tax will eventually be reset in shekel terms.
The government source leveled some criticism at the Economy and Industry Ministry for awarding meat-import licenses to established players, undermining competition.
“The retail chains like Rami Levy and Yenot Bitan, which have been getting import quotas, don’t know how to import, so they’re going to the big importers like Neto and asking them to import for them,” he said. “If they had allocated the licenses to real importers, they would have been able to gradually increase the competition.”
The official said he was hoping that eventually the bigger supermarket chains like Rami Levy and Super-Sol would set up their own meat-importing subsidiaries.
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